Passport Redux—The Taxman Wants His Due!

ORLANDO

By Orlando Gotay, Tax Attorney

It may be news to some of my readers: US citizens with “seriously delinquent” tax debt are at risk of having US passports not renewed or revoked. In 2018, that means a total amount due greater than $51,000. The IRS was expected to begin this process in January 2018, and I’ve read somewhere that over 200,000 taxpayers are eligible!

Passport revocation was added to the law in 2015, long a pet cause of retiring Senator Orrin Hatch of Utah. If you have debt that qualifies as seriously delinquent, the IRS certifies it and puts you on a list. The IRS then turns that list over to the Treasury Department. The State Department is then told about you. Once on the list, US government may refuse to grant a new passport or a renewal, or may go as far as revoking one. To people who live outside the US or travel extensively, this is a huge thing. Just the prospect of having a passport taken away can chill one to the core. Conceptually this is not new. People that owe enough child support have their passports not renewed until they pay down their debt. I can only imagine what will be the next object of Congressional fancy.

It has taken almost three years for the IRS, the Treasury, and the federal government to figure how to implement this, particularly the process of notifying taxpayers, advising remedies, and reviewing cases. Persons will have a process to fight certification, including going to Tax Court or other federal courts.

Pay attention if you owe in the neighborhood of $51,000. The trigger amount includes tax, penalty, and interest, and when your debt owed is growing daily, it isn’t too difficult to get there. The key is to not let the number rise above $51,000. Some situations prevent certification: a payment plan; being eligible for “currently not collectible” status; filing for bankruptcy; and a few other reasons like offers in compromise, being a tax identity theft victim, or “innocent spouse” procedures.

A letter will be sent by the IRS—you guessed it—to your last known mailing address. If that address is no longer yours, you will never get notice. It is important the IRS has your current address. You can update your address through tax returns or through change-of-address forms.

This stuff is heavy-handed, but people don’t have to take this lying down. There are, in my opinion, several alternatives short of outright payment. But sticking one’s head in the sand is certainly not one of them.

Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the US Tax Court, and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the federal and state tax matters of US expats in Mexico. He can be reached at tax@orlandogotay.com or Facebook: GotayTaxLawyer.